Sonic Automotive Buys 33-store RFJ Auto Partners in deal worth $700 million

North Carolina-based Sonic Automotive has confirmed a blockbuster deal, announcing the purchase of the RFJ Auto Partners group. The enormous transaction adds 33 storefronts to the Sonic Automotive group. When the deal closes, it’s expected to rocket Sonic Automotive into one of the top five US dealer groups according to total revenue.

RFJ Auto currently has 16 brands under their umbrella including the highest volume Chrysler Jeep Dodge Ram store in the world, Dave Smith Motors. With dealerships located across the Pacific Northwest, Midwest, and Southwest, it introduces the Sonic Auto presence in six additional states.

By adding the 33 RFJ Auto stores to the fold, Sonic Auto edges closer to its target of $25 billion in total revenue by 2025.  RFJ Auto generated $2.8 billion in revenue in 2020 alone. The total store count will increase from 87 franchised dealerships to 120 when the deal closes.

David Smith, CEO of Sonic Automotive and the EchoPark Automotive used car franchises, said, “We are very excited to welcome the RFJ Auto team to the Sonic family as we continue to expand our nationwide network. RFJ Auto’s management team – many of whom are former members of the Sonic family and have deep familiarity with our guest-centric mindset and innovative sales model – and the nearly 1,700 RFJ Auto teammates are an excellent fit with the culture and growth strategy of our franchised dealership business. As such, we anticipate seamless integration and expect to capture meaningful synergies from ‘day one’, creating significant long-term value for our shareholders.”

No stranger to Sonic Automotive

One of the former Sonic team members Smith refers to is Rick Ford, now the CEO of RFJ Auto. He previously held the role of Regional Vice President at Sonic from January 2007 to October 2010. He said in the press release, “As a past member of the Sonic family, I know exactly how complementary our businesses are and I look forward to bringing together our shared commitment to guest satisfaction, innovative processes, and industry-leading technology for the benefit of all of our guests, teammates, and stakeholders.”

President of both Sonic Automotive and EchoPark Automotive, Jeff Dyke, said of the deal, “This transaction is well-aligned with our strategy to grow our franchised dealership business by acquiring franchises that increase our geographic reach and expand our brand portfolio.

With my 20-plus year history with Rick Ford and much of his team, I very much respect and admire what a terrific job they have done growing and modernizing their business and see great synergies with the anticipated launch of our industry-leading digital omnichannel platform later this year. Beyond that, I am excited to once again work alongside Rick and his team as they remain in place to manage and accelerate our growth trajectory under this new partnership.”

Heath Byrd, Chief Financial Officer of Sonic Automotive and EchoPark Automotive, added, “Our focus on free cash flow generation and strengthening our balance sheet over the past few years has put us in the position to pursue strategic acquisitions like this while having the flexibility to allocate capital to our rapid EchoPark expansion plans, our dividend program, and opportunistic share repurchases. After taking account of the expected financing of this transaction with debt and cash on hand, our pro forma credit facility leverage ratio will remain comfortably within our targets.”

On the announcement, Sonic Automotive’s stock prices on the NYSE exchange jumped by more than 3% before markets opened. The group began in 1997 with just 20 stores have grown exponentially. Now with more than 30 EchoPark locations and 120 Sonic Automotive stores across the nation, the group has quickly become a powerhouse.

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